Nonprofit Direct Mail on Salesforce: Part 6: Segmentation

Hey there! My name is Dustin. I am a Solution Engineer for Salesforce.org based in Charleston, SC. Welcome back to my blog series about direct mail! It is great to be back back to this series after taking time off this summer to volunteer in Greece for the refugee crisis with Effect.org.

Today’s topic is a hot item of conversation for every single direct marketer out there. The topic is: where and how you process segmentation for your direct mail program. I will start off by saying that there is no right or wrong answer to this question. The approach to segmentation really depends on your business needs and how hands-on your team wants to be with the actual segmentation build. Today I am going to focus on three different approaches that we see most commonly when using the Salesforce platform. Those approaches are: reports, third party segmentation partners, and third party segmentation tools.

As a reminder for those new to the direct mail space, a segment represents a group of individuals who receive a mailing. Each mailing traditionally has multiple segments. The reason for setting up all of these segments is mainly around performance reporting. These reports will tell you how specific groups of people perform over a period of time. A sample segment could be 2 gifts, 0-6 Months, $100-$149.99. This represents two gifts in the last 0-6 months that sum up to an amount between $100 and $149.99.

Now to our first category – reports.

Reports

The Salesforce platform offers extensive reporting tools that allow you to create campaigns and add campaign members relatively easily. If you aren’t as familiar with campaigns, then check out my last blog post which focuses on campaigns and the campaign hierarchy. In the scenario where you are using reports to build your segments, you would have relatively few segments in your mailings. By this, I mean something like 20 or fewer segments in a mailing. If you are new to reports in Salesforce, then check out this workbook to learn more. The workflow for this process would look something like this.

As you can see, this process works very well for organizations that do not have a lot of segments in their mailing. It takes advantage of standard Salesforce functionality and does not require any integrations to third party vendors or tools. This is a great workflow for nonprofits that are just getting started on their direct mail journey or those with very standard RFM segmentation. RFM stands for recency, frequency and monetary. RFM segmentation looks at time the last gift was made, total number of donations, and gift amounts. Where you may encounter issues is when you start to have a lot of complex or varying segments per campaign. The burden of creating multiple reports to populate 50 or even 100 unique segments per mailing simply isn’t sustainable for enterprise level nonprofits. That is where our next two options come into play.

Third Party Segmentation Partners

As a general industry trend, I am seeing a majority of my enterprise nonprofit clients moving to a direct mail model where most (if not all) of their mass segmentation is done by third party marketing partners. These partners traditionally specialize in high volume direct mail for the nonprofit space. Merkle, Target MarkeTeam, and InfoGroup are just a few partners that I often see Salesforce customers working with. There are dozens out there on the marketplace. These partners offer a myriad of services often including marketing strategy, segmentation build, letter printing, and caging. Each one varies, so it is best to do your homework. In this post I am going to focus on the segmentation piece of their offerings.

You are probably asking how do these partners know who to place in each segment and which segments to use in a mailing. The answer always goes back to the data. These partners all use some variation of statistical modeling of your database to predict giving likelihood for each mailing. From those models they are able to tell which constituents you should be mailing (past donors, deep lapsed donors, event participants, etc). They take into account every piece of data you are able to provide them. They also often append data such as census and credit information. The diagram below gives you a very high level overview of the data transfer workflows.

In order to create models, the partners will need a copy of your data. This could be as simple as a CSV file transfer of biographical info. It could be as complex as an API architecture encompassing multiple data sources. During your initial meetings with these partners they will consult with your organization to identify the needed data sources. From this consultation they will design their data lake which will be used on their end for modeling.

Once their modeling is completed, these vendors will usually provide a report showing the predicted counts for your mailings. This report is broken down by segment and often includes projected cost information. From these reports your marketing team can fine-tune the final segments that will receive the mailing. After segments are finalized, the mailings are physically sent. You are also provided an import file from the partner. That import file will be used to flag all constituents who received the mail. They will be flagged using campaign members functionality in Salesforce. Some vendors will also even provide an import file to help you build the campaign records so there is no manual record creation. You can learn more about the import process in the Import Data Unit Trailhead. Your organization may also want to consider taking advantage of the newly released batch import tool in the Nonprofit Success Pack.

Third Party Segmentation Tools

I am defining third party segmentation tools as software solutions that allow for very complex modeling and direct marketing campaign builds. Tools that I often see in this space include RedPoint and SAS. These tools provide advanced statistical modeling capabilities as well as traditional marketing functions such as exclude and include processing.

This final option is used by nonprofit organizations who want the freedom to create and manage their own complex segments. These organizations traditionally have a sizeable marketing team with advanced technical skills.

The business workflow is very similar to those outlined in the Third Party Segmentation Partner section above. The only real difference is that data processing resides in house versus at a partner. In this scenario you would also be responsible for building your own data lake to house this data. Note that these data lakes can often be provided by the third party tool. The diagram below shows a very simple version of this architecture.

Summary

Many nonprofits get confused by how to best segment their direct mail lists to drive donations. I personally think that we will continue to see changes to direct mail as our constituents grow to expect a true multi-channel experience with the organizations they support. Cutting-edge technology including big data, artificial intelligence and the Internet of Things will all undoubtedly change these processes for the better. As we move forward I see the reports, third party partners, and third party segmentation tools as three very valid approaches to managing direct mail on the Salesforce platform.

As always, I welcome any feedback you have regarding this post of any of my others. If you missed any of my other posts about direct mail, you can find them here. Also feel free to check out a demo of Salesforce in action!